Trump is not a “businessman”

<5 min read

Donald Trump is not a businessman.  He’s a real estate developer.  Huuuge difference.

If we had, say, a software company CEO poised to set a new direction for our nation’s diplomacy, trade policy, military actions, law enforcement and healthcare system, we’d rightly be less worried.  Businesses that successfully solve problems (in the form of products and services) for people (individuals or business customers) prioritize sensitivity to human values, needs, and behaviors.  Customer experience (CX) and user experience (UX) are paramount.

Real estate developers have little customer orientation.  They aren’t making products or providing a service to anyone in particular.  They create value primarily by building something quickly, cashing out and moving on to the next project — not by innovating solutions, delighting customers, or understanding real-world consumer psychology. (Financial investing, commodity trading and Romney-style leveraged buyout businesses are also in this camp.)  A developer like Trump must care about macroeconomic trends that affect lending rates and property values — not so much the microeconomics of individual consumer/citizen experiences and decisions.  Trump, Inc. doesn’t have a CXO. 

The real estate development process rewards bullies: intimidating competitors out of the market to prevent overbuilding, strong-arming contractors to reduce construction costs, rationalizing corner-cutting, and berating permitting authorities.  The industry is notorious for graft and heavy-handed lobbying.  Arm-twisting politicians to grease the permitting wheels is not uncommon.  

Real estate is a rare industry where the least possible oversight is unambiguously best for the capital owner.  Delays cost money.  In fact, the biggest swing in a building project’s value at completion is attributable to time.  So, developers axiomatically rail against regulatory requirements to assess environmental impact, offset habitat destruction, consider visual impact, involve community voices, or abide by aesthetic covenants. Whereas raw libertarianism fails in most industries (and lacks adherents among contemporary business leaders and has long been debunked by academic economists), it finds an eager case study in real estate development.  

Most business sectors benefit from some regulation that ensures fair competition, protects customers, and minimizes volatility.  Even the oil and gas industry doesn’t want Trump to lift regulations on fracking, as they are fundamental to the good community relations that make operations smooth.  (Lifting regulations on fracking is in any case almost immaterial to o&g decision-making. Global commodity prices dictate whether its rational to recover a resource.)  Many industries have invested billions over time in accommodating smart regulations about air pollution, efficiency standards, toxin disposal, product labeling and safety practices.  Unwinding rules doesn’t deliver cost savings, because companies are optimized to meet existing requirements.  Imagine the absurdity of a manufacturer deciding to spend money to dismantle a production line, in order to then spend more money to rebuild it to new, lower standards.

The wild west of real estate development breeds a lose-lose, black-and-white mentality in those who make it their life.  It takes little creativity and (for those, like Trump, without resource constraints) little collaboration to provide the predictably ever-urbanizing world with yet another, bigger building.  It is unsurprising to those with exposure to the high-stakes commercial real estate sector that Trump’s oft-criticized “temperament” is one of simplistic, short-attention-span tribalism.  He’s a product a 50-year-long, monothematic career inside this one peculiar corner of “the business world”. 

Contrast the zero-sum real estate game with the complexity of technology product and service market dynamics.  Leading tech companies think creatively about creating new markets (not just wielding influence, to borrow more money, to make more of the same stuff, to match GDP and population growth).  Innovation, not access to capital, is the key to success for such companies.  They task sophisticated strategy brains with finding mutual advantage with competitors, and allocate substantial bandwidth to developing collaborative alliances and channel partnerships.  

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Back to the thought experiment of a software company CEO as president-elect:  She has likely had to have the humility and foresight to radically pivot the business strategy at some juncture.  And, she’s gained functional expertise in marketing, sales, finance, operations, data analytics and IT over a varied career path.  Success in that realm requires patience (not asset-flipping), thoughtfulness (not impulsiveness), creativity (not force), collaboration (not tone-deaf demagoguery), and flexibility (not intransigence).  

While the idea of a “businessman” politician evidently seems appealing to masses of uncritical voters, that is a meaninglessly broad descriptor (encompassing the 70% of American workers who don’t work in government, military, academia or healthcare delivery).  Not all segments of “business” engender the perspective, experience, habits, and temperament necessary to translate running a business into running a country.  Real estate development should have been the least appropriate candidate.  

 

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